Cautionary Tales: Life Insurance Mistakes

As a life insurance agent, I promote truth, honesty and transparency. These are three crucial characteristics of a great life insurance salesperson. Unfortunately, not everyone abides by these three principles. While life insurance can be a tremendous boon for grieving families, it has also been used by those with nefarious intent. I wanted to highlight a few examples of life insurance fraud and use them as examples of why you shouldn’t even consider attempting this.

The Infamous John Darwin

A man by the name of John Darwin had once tried his hand at life insurance fraud. In 2002, John Darwin decided to fake his death in a canoeing accident. For five years, John and his wife, Anne, pretended as though John had actually passed, with John secretly living with his wife while also living next door to his house in a bedsit. During that time, John and Anne had been spending the money from John’s life insurance policy on trips and material items. In 2007, the couple was caught red handed and arrested. Both John and Anne were sentenced to six years in prison and eventually released on parole in 2011.

A Dishonest Agent

Unfortunately, sometimes, it isn’t just policyholders who try to abuse the system. There have been many cases wherein the life insurance agent attempts to scam the system. For example, there was a situation where a Minnesota life insurance agent stole approximately $1.6 million by cashing in fraudulent refund checks. The agent also enlisted the help of a friend in order to cash the vast majority of the checks. While the former agent was able to steal millions of dollars, the reward was short-lived, as the employee was caught and sentenced to almost 3 years in prison.

The Dedicated Fraudsters

This last cautionary tale is absolutely mind-blowing. A pair of Los Angeles funeral home workers decided to create an imaginary relative, purchase a policy in his name, and kill him off. They were incredibly dedicated to the fraud, even going as far as to host a fake funeral. In order to do this, they had to bribe a doctor to forge medical documentation, which he did. The plan went without a hitch; until the doctor they had bribed decided to turn himself, and the pair, in. The two masterminds were sentenced to prison.

Fraud is a very serious crime and should not be taken lightly. Life insurance companies are subject to hundreds of fraudulent claims costing the industry several billions of dollars. Try as you might, if you commit fraud, you will be caught and you will serve time.